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Secretary, Department of Social Security and Roslyn Ruby Pyke [1998] AATA 251 (9 April 1998)

Last Updated: 1 May 1998

Administrative

Appeals

Tribunal

) No T96/251

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF SOCIAL SECURITY

Applicant

And ROSLYN RUBY PYKE

Respondent

Decision No 12794

Tribunal Mr C P Webster (Senior Member)

Date 9 April 1998

Place Hobart

Decision The decision of the SSAT dated 21 November 1996 is set aside and that the decision of the delegate of the applicant dated 6 May 1996 and affirmed by the Authorised Review Officer on 13 June 1996 is affirmed.

..............................................

Senior Member

CATCHWORDS

Social Security - overpayment of additional family allowance - meaning of "regard is had to the person's taxable income for a tax year" - whether the term "regard" means that the estimated figure has to be used in calculation of rate of additional family allowance

Social Security Act 1991 - s885

Introduction

1. The Secretary, Department of Social Security ("the Department") seeks a review of a decision of the Social Security Appeals Tribunal ("the SSAT") of 13 November 1996, which varied a previous decision of an authorised review officer to reduce a debt owed by Mrs Roslyn Pyke ("the Respondent") to the Department. The authorised review officer determined the debt to be $3,348.65 on 13 June 1996. The SSAT varied that decision to reduce the debt to $1,601.45.

The Evidence

2. No oral evidence was adduced by either party at the hearing before the Administrative Appeals Tribunal ("the AAT"), as both parties were content to rely on the documentary evidence contained in the "T" documents.

Findings of Fact

3. From the "T" documents I find as fact the following:

(a) The respondent claimed family payment on 23 June 1994. She advised she had two children.

(b) The respondent stated that she and her husband had a combined income of $25,299 for the 1992/93 financial year and provided an estimate for 1993/94 financial year of $19,097.

(c) On 29 June 1994 the applicant wrote to the respondent seeking estimates for 1993/94 and 1994/95 financial years.

(d) On 4 July 1994 the respondent provided an estimate of $21,000 for the financial year 1994/95 and advised that she had already provided an estimate for the 1993/94 financial year.

(e) By letter of 14 July 1994 the respondent was advised of the rate of family payment to be paid to her. This was based on the estimates of income provided by the respondent.

(f) On 1 November 1994 the respondent lodged a review of family payments for 1995/96 and gave a fresh estimate of $22,300 income for 1994/95 financial year. She advised that her taxable income for 1993/94 financial year was $17,316.

(g) The applicant considered the respondent's estimate of income provided on 1 November 1994, but used her income in the 1993/94 financial year for the purposes of calculating family payment for the 1994/95 year.

(h) The respondent lodged an income estimate and provided documentary proof from the Australian Taxation Office for 1994/95 financial year. This showed a total income of $30,498.

(i) The applicant raised an overpayment of family payment of $3,348.65 on the basis that the respondent's estimate for the financial year 1994/95 was less than 75 per cent of the income that she and her husband had actually earned.

The Law

4. The issue in this review is whether a debt of $3,348.65 or part thereof exists either because the respondent provided an incorrect estimate of her 1994/95 income or because she failed to notify of a notifiable event.

5. The relevant section is s.885 of the Social Security Act 1991 ("the Act") as it was before amendment.

6. Section 885 stated:

"885. If:

(a) in working out the rate of family payment payable to a person, regard is had to the person's taxable income for a tax year; and

(b) that taxable income is an amount estimated by the person; and

(c) the Commissioner of Taxation subsequently makes an assessment of that taxable income; and

(d) the estimated amount is less than 75% of the amount assessed by the Commissioner;

the person's rate of family payment is to be recalculated on the basis of that taxable income as assessed by the Commissioner.

7. The applicant disagrees with the SSAT's interpretation of this section in that the SSAT considered the applicant failed to have regard to the respondent's estimate of income or of November 1994 ($22,300) for 1994/95.

8. The applicant argues that it did have regard to these estimates, but having regard to these estimates does not mean that the applicant has to use those estimates and calculate the rate of payment.

9. The essential issue in this review is the meaning of s.885(a) which states:

"in working out the rate of family payment payable to a person, regard is had to the person's taxable income for a tax year."

Application of the Law

10. The respondent agreed with and relied upon the decision of the SSAT.

11. That is, the respondent did not dispute that the applicant had regard to the respondent's estimate of taxable income in paying family payment from payday 7 July 1994 to 1 January 1995 as it properly relied on the respondent's estimate of her 1994/95 income provided in July 1994.

12. The respondent therefore concedes and the AAT finds that on this basis there was an overpayment of $1,601.45 from 7 July 1994 to 1 January 1995.

13. The SSAT decided that the applicant should have used the respondent's revised estimate of $22,300 for 1994/95 provided on 1 November 1994 in calculating the respondent's entitlement following 1 January 1995.

14. The SSAT considers that as the applicant did not calculate the respondent's entitlements using the respondent's estimate the applicant erred in its calculation of the respondent's entitlement and there was accordingly no overpayment after 1 January 1995.

15. The applicant argues that it did have regard to the respondent's estimate of income provided in November 1994. It submits that although the applicant did not use the respondent's estimate of income provided in November 1994 to calculate the applicant's rate of payment, (instead using the actual income for the applicant's base year - 1994 financial year as the basis of the calculation), it still had regard to the November 1994 estimate as required by s.885.

16. The scheme of additional family payment is to fix a rate of payment based on a person's income for "the base year". That is, the tax year immediately preceding the current calendar year.

17. The rate of payment can however be adjusted by taking into account a person's current income or likely income for a current tax year. The year of income on which payment is based is called the "appropriate tax year".

18. The appropriate tax year can be changed from the base year by the provision of estimate. In this case, the respondent's base year income would have produced less than the maximum rate of payment. As the respondent thought that her income in the current tax year, 1995, was going to be less than 1994 she provided an estimate. That estimate allowed the maximum rate to be paid and it was used as the basis for payment until the end of the 1994 calendar year.

19. From 1995 payment reverted to the base year despite the respondent's estimates provided for 1995. From 1 January 1995 the respondent's rate of additional family payment was calculated using the base year income as it produced the highest rate of payment, although the applicant was aware that the respondent's estimate for her income was $22,300. The effect of this estimate is that there would have been no overpayment if the respondent's income was anything up to $29,733, as she is allowed a 25 per cent leeway on any estimate she provides.

20. If that estimate had not been provided the respondent would have had to advise if her income went over $27,905. The effect of providing an estimate of income in November 1994 was therefore to provide a buffer zone of $1,828 above the figure of $27,905. If the respondent's income had fallen between $27,905 and $29,733, no overpayment would have resulted, as her estimate of $22,300 was within 75 per cent of her final taxable income. The applicant took into account the respondent's estimate, although it did not use that estimate for the purposes of calculation of the additional family allowance.

21. The additional income for 1994/95 financial year was in fact $30,498, which exceeded 25 per cent leeway on the November estimate of income in any event.

22. The applicant submits that the SSAT wrongly equates the words "had regard to" with the word "used". The applicant submits the words "had regard to" mean "to consider" and the applicant considered Ms Pyke's estimate of November 1994.

23. The meaning of the word "regard" contained in The New Shorter Oxford Dictionary is:

"A thing or circumstances taken into account in determining action; a consideration, a motive."

24. In The Macquarie Dictionary relevant definitions of the word "regard" are:

"... 2. To have or show respect or concern for ... 4. To take into account; consider 5. To look at; observe ..."

25. The normal meaning of the term "regard to", in the view of the AAT in the context of s.885, is to take into account or to consider. This means that before determining the rate of payment of family payment the applicant had to consider or take into account the respondent's estimate of income provided 1 November 1994.

26. The applicant was entitled to use the respondent's base year for the purposes of calculating the respondent's rate of payment (s.1206-H12) and it did so. Although the respondent was aware of the estimate of income provided by the applicant on 1 November 1994 and had regard to it, it was not necessary for the applicant to use it to calculate the respondent's rate of payment.

27. The difference between the amount the respondent was paid and the amount the respondent was entitled to receive was $3,348.65.

28. The remaining question is whether this overpayment should be waived or written off. For this to occur there must be special circumstances that make it desirable to waive the debt. The AAT does not consider that there are special circumstances in this case nor did the respondent contend at the hearing of the review that special circumstances existed.

Decision

29. That the decision of the SSAT dated 21 November 1996 be set aside and that the decision of the delegate of the applicant dated 6 May 1996 and affirmed by the Authorised Review Officer on 13 June 1996 be affirmed.

I certify that this and the seven (7) preceding pages are a true copy of the decision and reasons for decision herein of

Date/s of Hearing 18 February 1998

Date of Decision 9 April 1998

Applicant's Representative Mr J Kearney,

Department of Social Security

Respondent's Representative Mr B Abraham

Launceston City Legal Service